A one-year contract between Paul O’Neill and the Yankees is virtually done, according to sources. If O’Neill passes a physical and a few minor details are ironed out, O’Neill will be back in The Bronx.

This means O’Neill, who will be 38 when next season begins, isn’t going to be available as free agency starts today. His Yankee contract is believed to be for $6.5 million, which is how much O’Neill made last season.

A source said the signing of O’Neill won’t preclude the Yankees from going after the Indians’ Manny Ramirez. Both play right field, but both could DH and O’Neill might be better served to get a little less action as he moves up in age.

O’Neill may have saved his Yankee career by having such a tremendous Subway Series. After struggling throughout the playoffs, O’Neill was 9-for-19 (.474) in the five game series. O’Neill finished the regular season with a .283 average, 18 homers and 100 RBIs.

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The Yankees have until Nov. 15 to pick up Glenallen Hill’s option or work out a better deal for the right-handed power hitter or he will become a free agent.

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At about 11 a.m. yesterday, GM Brian Cashman called Garry Denbo with the good word. Denbo, who turns 40 next month, was being called up to the majors.

Denbo, whose entire playing career was spent in the Reds’ minor-league system, was named the Yankees hitting coach yesterday. He replaces Chris Chambliss, who was fired after the World Series.

Denbo is not new to many of the Yankees, specifically Derek Jeter and Jorge Posada, as he has spent the past 11 seasons in the Bombers system, focusing mainly on improving guys’ swings.

Listening to him yesterday on a conference call, you could hear the passion he bring to his new job. This was exemplified when he was asked about Tino Martinez’ inconsistent production the past few years and how Denbo will help change that.

“Maybe Tino’s gotten away from what has allowed him to have great success earlier in his career,” Denbo said. “And that is to use the entire field to hit. Tino is a dedicated hitter and he is very intense and sometimes the intenseness works against him. When Tino does realize he needs to use the entire field to hit and relax and let his abilities to take over he becomes the great hitter that he’s been in the past.”

Denbo has seemed to be the favorite to get the job with Don Mattingly not wanting to travel. The only minus against Denbo was he hasn’t had much of a relationship with Joe Torre, whom Denbo met with Thursday morning to clinch the job.

“It went very well,” Denbo said. “He asked me some philosophical questions about what I thought, what I planned to do with the hitters.”